Speedy in Seattle

The only real surprise from the FDA's approval of Seattle Genetics' (Nasdaq: SGEN  ) Adcetris on Friday was the timing. After a unanimous recommendation from the FDA advisory panel, approval of the lymphoma treatment looked like a slam dunk on or around its PDUFA date of Aug. 30.

A decision 11 days before the FDA's goal is a little unexpected, but the agency seems to be handing down decisions quickly this month. Roche gained early approval for its melanoma drug Zelboraf. And Adventrx Pharmaceuticals (AMEX: ANX  ) heard back from the FDA earlier than expected, albeit not the decision shareholders were hoping for.

But investors in companies with upcoming FDA decisions -- Shire's (Nasdaq: SHPGY  ) Firazyr and Nupathe's Zelrix, for instance -- shouldn't necessarily expect the same treatment. Adcetris, Zelboraf, and Adventrx's Exelbine are all cancer drugs, so all we can say is that the reviewers in the Office of Oncology Drug Products are running ahead of schedule. In fact, Regeneron Pharmaceuticals (Nasdaq: REGN  ) announced last week that it will take three months longer to get an FDA decision about its macular degeneration drug, Eylea.

For Seattle Genetics, the first approval is a huge milestone. The biotech has funded some of its operations by licensing its antibody-drug conjugate technology to other drugmakers, but Adcetris will provide the first real revenue stream for the company. The types of lymphoma the drug treats are relatively rare, but Seattle Genetics can make up for the low volume with a high price tag. Adcetris will cost around $108,000 per patient -- assuming eight doses at $13,500 each -- and could theoretically be higher if patients take more doses.

Equally important, the approval is an endorsement of the ADC technology. Seattle Genetics has three more ADC molecules in the clinic -- all phase 1 -- in addition to 11 ADC partnerships from which it'll get royalties and milestones if the collaborators' drugs work.

I called Seattle Genetics a little overpriced in July, but since then it's fallen considerably and the risk of an FDA rejection -- however slight it was -- is gone, making the drugmaker considerably more appealing at this level.

What's your take? Let us know in the comment box below.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On August 22, 2011, at 4:44 PM, Emperor2 wrote:

    If I had the types of cancer that this drug treats i would be delighted that I can now have access to it's very potent action. As an investor in SGEN, I an truly disappointed in the pricing of the treatment. If Clay Siegall, chief executive officer of Seattle Genetics, thinks that this ludicrous pricing won't tank the stock, he is smoking some of that weed that causes delusions. DNDN dropped about 67% when they disappointed in sales. I fear that SGEN has priced themselves out of the market. I realize they spent about 1/2 billion in getting the drug approved. But they are deluded if they think they can price their drug this high and have everyone be happy to pay for the treatment. This pricing borders on lunacy.

  • Report this Comment On August 22, 2011, at 6:32 PM, TMFBiologyFool wrote:

    The problem for DNDN is price density (cost vs time) for the doctors that have to purchase it and be reimbursed, which isn't nearly as bad for SGEN.

    The doses are given three weeks apart, so about 24 weeks for Adcetris vs 6 weeks total for Provenge (3x2 weeks).

    The price really doesn't seem so bad to me. There's a limited population, which requires a higher price to justify development.

  • Report this Comment On August 23, 2011, at 8:38 AM, worthycomments wrote:

    SGEN president /chairman (?) did a POOR job articulating the cost case on cnbc yesterday.

    #1 - he wasn't calm. appeared defensive / nervous.

    #2 - Make it SIMPLE for TV viewers.

    #3 - INSPIRE

    SIMPLE answer - In understanding the pricing level of this drug one has to compare the current average cost to an insurer for a patient stay in the hospital plus the extended additional care for these illnesses, which runs about $ XXX.

    Our medication only runs about $ YYY and provides a path toward returing the patient to a long term stablilized condition.There is a very real value in terms of dollars AND outcomes provided by this choice.

    The benefits associated with this are plain to see for the patient, the health care provider and the payor ... as well as it allows our company to be able to afford to develop and deliver additional cutting edge, cost effective life saving medical benefits. It's a win on all sides.

    Now was that so difficult!?

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